To all,
Here's some comments on the merger from TechInvestor:-
3Com, U.S. Robotics To
Merge
(02/26/97; 6:30 p.m. EST)
By Larry Dignan, TechInvestor
NEW YORK --U.S. Robotics and 3Com said
Wednesday that they will merge in a stock swap
valued at about $6.6 billion.
The new firm, which will retain the 3Com name,
will have more than $5 billion in annual revenue
and have more than 12,000 employees in 130
countries, the companies said.
Under the deal each share of U.S. Robotics will
be exchanged for 1.75 shares of 3Com. The
deal is expected to close this summer.
The transaction will be accounted for as a
pooling of interests, and is expected to be
neutral or add slightly to 3Com earnings in fiscal
1998. 3Com will take a quarterly charge when
the deal is completed.
Bill Schaff of Bay Isle Financial said the deal
makes sense for both. "U.S. Robotics was
going to be a commodity player, but they have
good channel distribution, brand name and
manufacturing," he said. "3Com was basically a
number two networking company and couldn't
compete with Cisco. It's a good move for both."
Shares of both 3Com and U.S. Robotics were
up in after-market trading Wednesday, poised
for a heavy day of trading Thursday. 3Com
[Coms] closed at $39 Wednesday and U.S.
Robotics [Usrx] closed at $61. 3Com shares
have been under pressure lately while U.S.
Robotics shares are down 39 percent from last
May, when the stock hit the $100 level.
The merger is the latest in a series of
industry-wide deals designed to provide a
complete LAN-to-WAN product line. Cisco
spent more than $4 billion last spring to acquire
StrataCom; the acquisition by Newbridge
Networks of UB Networks, and another 3Com
acquisition last fall of OnStream Networks Inc.
for $258 million all illustrate the emergence of
the networking merger trend.
"3Com buying USR gives them access to the
carrier and consumer market," said Amar
Senan, a telecommunications analyst with
Volpe, Welty & Co., San Francisco. "USR is
strong in all parts of the modem business,
including cable and xDSL modems."
John Girard, an analyst with Gartner Group
Inc., Stamford, Conn., said the ability to
combine the two companies' strengths comes
along at an opportune time. "Here are two
companies that need a jump-start right now.
USR has done creative marketing lately, but it's
not clear that there's technology behind it.
3Com has solid products but its sales were
flagging."
3Com said Eric Benhamou, chairman and CEO
of the networking giant, will be the CEO of the
combined company. U.S. Robotics Chairman
and CEO Casey Cowell, will be vice chairman.
U.S. Robotics and 3Com said the merged entity
will be the market leader in remote access
products, workgroup hubs and switches,
modems and intelligent network interface cards.
"With an installed base of over 100 million
network connections, we can offer network
users the fastest access to their local and wide
area networks," said Benhamou in a release.
"This combination will be good for customers,
good for shareholders, and good for our
employees."
Terry Sweeney and Amy Rogers of
Communications Week contributed to this
story.
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